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TriQuint's merger wins backing from former critic, who cashes out most of its stake

Triquint chips.JPG

TriQuint Semiconductor announced in February that it will combine with RF Micro Devices, of North Carolina. An activist investor that had been campaigning for change at the Hillsboro company said it's satisfied with the deal.
(The Oregonian)

Starboard Value, an activist investor that had campaigned to break up TriQuint and had been seeking to toss out six of its eight board members, said in a regulatory filing that it likes TriQuint’s plan to merge the company with RF Micro Devices.

The deal has certainly been good for Starboard. TriQuint shares were trading at $9.23 before it announced the RFMD deal in February. They shot up 26 percent after the announcement and kept rising – closing Friday at $13.06.

Starboard began unloading shares shortly after the deal was announced. Previously, Starboard had held about 8 percent of TriQuint’s shares. The company’s filing Friday indicates it now holds just 2.7 percent of its stock.

TriQuint is one of Oregon’s largest technology companies, with close to $900 million in annual sales and roughly 900 employees at its Hillsboro headquarters and chip factory. The company makes specialized chips for mobile devices and communications networking.

Its largest customer is Apple contractor Foxconn, which accounts for roughly a third of TriQuint’s sales, and TriQuint power amplifier chips have had a prominent spot in each of the last several iPhones.

TriQuint announced in February that it plans to combine its business with RFMD, a slightly larger competitor in North Carolina. The companies would operate two headquarters for a time, though RFMD’s chief executive would run the combined company.

Starboard said that it had analyzed the proposed deal and decided it “is in the best interests of shareholders and has the potential to create substantial long-term value.” TriQuint and RFMD can save $250 million through the deal, Starboard concluded, well above the $150 million the companies say they can save.

TriQuint chief financial officer Steve Buhaly, who is slated to stay on after the deal closes, said by e-mail that the company appreciates Starboard's support.

Following the combination, Starboard suggested, the companies should consider spinning out TriQuint’s network and defense business, along with RFMD’s multi-market products. The investment fund said it is continuing to talk with TriQuint about Starboard’s nominees for the Hillsboro company’s board and said it would like to see at least one new director serving on the board of the combined company.

While investors have embraced TriQuint’s pending combination, the deal has created great uncertainty in Hillsboro. The company has acknowledged that it will have surplus manufacturing capacity following the deal, and will likely close either the Hillsboro factory or an RFMD facility in Greensboro.

Note: This article has been updated with a brief comment from TriQuint.